Enterprise risk management (ERM) is the stewardship of a firm’s operational, financial and strategic risks together. But how many generalist brokers use it with their clients? Anthony Wilson (pictured above) says ERM is a big broker opportunity.
“Yes, absolutely,” said Anthony Wilson (pictured), an expert in risk management and partner with ABM Risk Partnership (ABM) in Sydney. ERM is also the focus of Wilson’s podcast show: Mastering Risk Management, launched in 2017. He recently chalked up 100 episodes and more than 100,000 downloads.
Wilson said brokers should be focused on insurable risk but this only provides “a reasonably narrow scope when they engage with an organization.”
Once a broker can start an ERM discussion he suggested a whole world of possibilities can open.
“We are finding that some enlightened brokers understand that if you take an enterprise-wide approach, then the whole risk performance lifts and the risk capability of the organization increases and therefore the insurable risk is lower,” said Wilson. “So the brokers love it, clients love it and the underwriters love it.”
He said many big corporate businesses have already adopted ERM, sometimes because of investor pressure.
“We see it played out in things like the climate and sustainability initiatives that are going on at the moment,” said Wilson. “There's a lot of push from shareholders and investors and other interest groups to get big organizations to do that.”
However, for brokers at the SME end of town, he suggested there is also considerable opportunity.
“I think they [SMEs] understand that being able to evaluate and analyse risks, whether it's the opportunity risk analysis – so should we spend money on this particular initiative?” Wilson said. “Or the threat risk analysis - so what's going to threaten us achieving that particular goal that we've got? It’s just good business sense.”
He said putting these opportunities and threats through a formal process like ERM is no different to other business processes.
“It’s no different than your financial processes, your payroll, recruitment or IT processes,” said Wilson. “It’s just formalizing a lot of stuff that comes naturally anyway.”
He said brokers already add a lot of value for clients.
“But here is an opportunity to stand out even more, to be able to say, ‘We're not just talking about your insurable risks,” said Wilson. “We're actually talking about helping you upskill and improve your maturity and risk management so that it doesn't matter whether it's insured or not, you've got a better opportunity to manage those risks.”
He said his firm recently conducted a workshop for a group of businesses. He suggested that these business leaders were eager to listen when ABM expanded the conversation to talk about ERM.
“We were able to expand the conversation to say: what else?” Wilson said. “What else is going to threaten your objectives? Or what else could you be doing to accelerate your objectives?”
He said the broker was seen as adding value to this discussion.
“It was great to see the excitement in the room, not just all about paying more premium, or asking if a cover is going to respond to a disaster that we have,” said Wilson.
He said this takes the business mindset away from the perspective that insurance is only worthwhile in a disaster scenario. The new approach becomes, said Wilson, “Why don’t we do more risk prevention and then we can pay less for our insurance and reduce the likelihood of that disaster anyway.”
Wilson spent more than two decades at Woolworths, including as general manager of risk and safety and chief audit executive.
“I was tasked with establishing enterprise risk management in the firm and getting risk management to be more than just purchasing insurance,” he said.
In 2017 he partnered with two colleagues to form ABM. He said the acronym simply stands for their names: Anthony, Brett and Muir.
The prompt to start a podcast, he said, came from his experience at Woolworths and also risk consulting with a range of business. That experience showed him that frontline managers through to senior executives can all have trouble understanding what ERM really is.
“I thought there's got to be a way of helping spread the word about enterprise risk management and what it does for a business,” said Wilson.
He said this involves both sides of the risk equation: opportunities and threats.
“It seemed like a good way to leverage the risk management experience that's out in the community and also people that maybe don’t consider themselves a risk practitioner, but apply it very practically,” said Wilson. “So that was the genesis of the podcast.”
Brokers interested in learning more about risk management can also sign up for The Insurance Risk Management Study Course. This regular program is offered by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).
